I Prompted ChatGPT: What's "Head and Shoulder" pattern in finance?
Response:
The "Head and Shoulders" pattern is a technical analysis chart formation used in financial markets to predict a reversal in a price trend. It has two main variations:
- Head and Shoulders Top (bearish):
- Left Shoulder: A price rise followed by a peak and a decline.
- Head: A higher peak forms after the left shoulder, followed by a decline.
- Right Shoulder: A lower peak than the head, signaling weakness, followed by another decline.
This pattern suggests the end of an uptrend and the potential start of a downtrend.
- Head and Shoulders Bottom (inverse or bullish):
The same pattern, but inverted, indicating the end of a downtrend and the potential for an upward reversal.
